For the past 40 years, the category "chronic liver disease and cirrhosis" has consistently ranked among the top 10 leading causes of death in the United States. Today, this category is the sixth most common cause of death among US citizens during the most productive period of their lives, from ages 25 to 64. It has become apparent that hepatic failure due to cirrhosis is associated with progressive fibrogenesis (fibrosis) that ultimately results in nodulation of the liver parenchyma, and is seemingly irreversible. Hepatic fibrosis is the end pathway of several different liver diseases including cirrhosis induced by alcohol abuse and hepatitis C. Fibrosis of the liver, irrespective of the primary disease, is the single most degenerating event that leads to liver failure. Hepatic fibrosis is associated with extracellular and cellular morphology and behavior changes, which lead to major alterations in the liver function. The current dogma implicates hepatic stellate cells as the primary source of excessive extracellular matrix production during liver fibrosis. A goal for our laboratory is to understand the role of matrix microenvironment and epithelial-mesenchymal transition in the progression of liver fibrosis. Our preliminary data provides convincing evidence that implicates adult hepatocytes as significant contributors to the fibroblast population in the injured liver. We demonstrate that bone morphogenic protein-7 (BMP-7), a growth factor associated with liver development, can accelerate regeneration of liver after 70% partial hepatectomy in association with significant decrease in TGF-beta1 expression. Additionally, we also demonstrate that BMP-7 can inhibit TGF-beta1 induced EMT and attenuate CCI(4) induced chronic liver fibrosis. In this proposal, we will employ genetic and cell biological approaches to address two in depth specific aims. Our experimental approach is designed to provide unequivocal proof for the direct role of hepatocytes in the emergence of fibroblasts during liver fibrosis. Additionally, we will also study the mechanism of BMP-7 action in the liver and identify pathway/s via which BMP-7 provides protection to hepatocytes against damage. Therefore, this application is well poised to identify a unique mechanism of liver fibrosis and also study a therapeutic agent, which works against this mechanism and inhibits progression of liver disease.